The constitution of the Jersey Milk Marketing Board. Exit strategy for farmers wishing to leave dairy industry

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QUESTION TO BE ASKED OF THE PRESIDENT OF THE FINANCE AND ECONOMICS COMMITTEE ON TUESDAY, 1st APRIL 2003 BY THE DEPUTY OF ST. JOHN

Question

1. Will the President informmemberswhether the application for aid in supportof the dairy industry exit strategy in 2002 came from the industry directly orthroughtheformer Agriculture andFisheriesCommittee?
2. Will thePresident inform memberswhether the Finance and Economics Committeeinspectedtheaccountsof the Jersey MilkMarketing Board prior to agreeing to provide aid for the dairyindustry exit strategy in2002, and, if not, explain thereasonswhy?

Answer

1. During 2002, the FinanceandEconomicsCommittee approved two amountsof funding for the restructuring of the Dairy Industry, the first in March2002amounting to £500,000,and the secondin July 2002 for £350,000.

D  ue to the urgent need to commence both restructuring schemes, the Committee worked side by side with the

former Agriculture and Fisheries Committee in addressing the request of the Dairy Industry, but the formal requests came from, and the actual funding was given to, the former Agriculture and Fisheries Committee, which administered the schemes.

I n both cases, before the Finance and Economics Committee considered the proposals, the former Agriculture

and Fisheries Committee had previously met and agreed to support the requests of the Industry.

T h is information has already been conveyed to Members in a full Statement to the House on 24th July 2002,

by the previous President of the Finance and Economics Committee.

2. The Finance and Economics Committee waspresented with financial information in both instances by the Dairy Industry,however it did notconsideritnecessary to inspect the accountsof the Jersey MilkMarketing Board, as the restructuring schemes were simply a matter of tackling urgently the uneconomic over- production of milk, in respect ofwhich full background information was provided totheCommitteeby officers of both the Agriculture and Fisheries Departmentand the Treasury.Theexistenceofoverproduction was beyonddoubt.

T w o options were proposed for reducing this over-production, through the Jersey Milk Licensing Scheme.

The industry believed that the first option, a pro-rata cut in farm output on all producers, would have proved catastrophic to many producers given the existing low levels of profitability in the industry and would have resulted in bankruptcies.

T h e second option available, and adopted, was that of a restructuring scheme to encourage some producers to

retire from the industry and thereby reduce overall production, bringing benefits to both Jersey Milk and the remaining producers. The costs of the schemes were funded jointly between the Finance and Economics Committee, from the General Reserve, and Jersey Milk.

T  he decision to restructure the Industry has subsequently been borne out by the report for the Economic

Development Committee by Dr Donald McQueen "The Dairy Industry in Jersey – A Strategic Review" - which states " the beneficial effect of the restructuring schemes on the average returns of the remaining participants will be material and to the extent that this was the purpose of the schemes they are likely to have been successful."